How to Start Trading Stocks in Nepal

The stock market is a place where investors buy and sell share stakes of publicly listed firms. It would allow an investor to acquire ownership stake in those firms and thereby have the right to benefit from the growth thereof. Nowadays the Stock market and investment in stock is grown here in Nepal. The Nepal Stock Exchange, being the only stock exchange of the country, offers a platform for trading stocks, bonds, and mutual funds. 

It thus plays a very important role in capital formation and providing investment avenues, which are believed to be important for economic growth. Whether you are new in the stock market or an investor wanting to expand your investment profile, this guide will help you understand the basics of stock trading in Nepal. Before learning to do stock trading in Nepal make sure you know Basic of stock and stock market.

Nepal Stock Exchange (NEPSE) :

It is the only stock exchange in the country and it was established in 1993. The Nepal Stock Exchange operates under the regulation of the Securities Board of Nepal, generally known as SEBON, which regulates the securities market to ensure that there is fair play and transparency in the market. NEPSE lists companies from various sectors such as banking, finance, hydropower, and manufacturing and operates through online and offline trading platforms.

NEPSE follows market timings from Sunday to Thursday between 11 AM and 3 PM, hence making it accessible for individual as well as institutional investors.

Things to know about (NEPSE) Nepal's Stock Market :  

Before starting trading in Nepal you need to know about various terms which are :

Demat Account: A digital account where your stock is held in electronic form. From the demat account you can view your entire portfolio.

Trading Account: An account with which you buy and sell stocks on NEPSE. This account helps to sell your stock and buy stock that is available for trading.

IPO (Initial Public Offering): 

A market which allows new stock to be issued. Basically you can purchase stock available on IPO.

Secondary Market: 

A market in which stocks that are previously issued are traded amongst investors.

Market Order: 

An order to buy or sell stock at the best prevailing price.

Limit Order: 

To place a "buy" order or "sell" order at a specified price.

Bull Market: 

Prices see an uptrend.

The Step-by-Step Guide To Start Trading in Nepal: 

Open Demat Account:

Before starting trading in Nepal you should create a Demat Account. This account holds the shares in an electronic form that you have. You can get this account through banks or licensed Brokers in Nepal.

Opening Trading Account:

You will be required to open a trading account through a licensed stockbroker for buying and selling shares in NEPSE. Your broker will execute your orders for buying and selling.

MeroShare and TMS:

MeroShare is the web portal from which you can apply for an IPO and view your investment. TMS is a system through which you can trade your shares online. Both will require your credentials with your stockbroker and Bank who have provided you with a DEMAT Account. You need to pay Rs 100 + Rs 150 for your DMAT and MeroShare Account per year. Remember that You should use a TMS account to purchase or sell your stock that you have.

Link Your Bank Account:

After having a DEMAT Account you should Link Your Bank account and your Demat and trading account. Which will allow you to receive your Trading amount and Purchase New Stock with Amount at your bank.

Place Orders to Buy or Sell Shares:

Once you have created a DEMAT account ,TMS account and Linked your Bank accounts , you can create orders from Your TMS account for buying or selling of shares through the broker's platform or through the TMS.

Trading Platforms and Brokerage in Nepal

While selecting a broker, one should check on licensing, fees of trading, and customer service. More than 79+ licensed brokers are listed with NEPSE in Nepal. You can even be given access to an online trading platform provided by the brokers to place trades directly through the TMS.

Primary vs. Secondary Market in Nepal

Primary Market:

The primary market is the market that issues new shares by companies in order to raise capital. Investors can buy shares in a company during its Initial Public Offering-IPO. These shares are later listed on NEPSE.

Secondary Market:

These are traded and sold in the secondary market after listing. Investors dealing in such shares do so through brokers. The prevailing prices in the secondary market are determined by the demand and supply.

Tax Regulations Relating to Stock Trading in Nepal

Capital Gains Tax:

The investor has to pay capital gains taxes on the gain realized from the sale of any share. The rate may vary depending upon the period of holding and amount of profit.

Regulation by SEBON:

The rules and regulations regarding the stock market in Nepal are prescribed by SEBON, and an investor accordingly needs to abide by those acts in order not to face any legal penalties.

The Future of Stock Market Trading in Nepal

The Nepalese stock market is still in its growth stage, and there is huge scope for future development. With the advancement of technology, the facility of online trading is also becoming easier. Hydropower and technology are some of the latest emerging sectors, which may offer new investment opportunities for domestic and international investors.

First, learning the basics of NEPSE, acquiring knowledge about financial instruments, and then building up a good investment strategy come out to be important steps. Remember, any investment in the stock market involves risks hence, we should do some research and take professional advice whenever required.

Frequently Asked Questions Related to Stock Market Trading in Nepal

What is the minimum amount required to start trading in Nepal?

You can start trading with a minimum of NPR 1,000, though many recommend starting with NPR 5,000-10,000.

How to invest in an IPO in Nepal?

You can apply for IPOs through the MeroShare platform using your Demat account.

Can foreigners invest in the Nepal stock market?

Yes, but they must follow specific rules and regulations set by SEBON.

What are the general risks that come with trading in the stock?

These would include market volatility, economic fluctuations, and company-specific risks.

How to track portfolio performance?

Investors may track portfolio performances from the MeroShare platform and get updated on the NEPSE market.

Learn more about : Basics of the Stock Market to Start Trading